tv Politics and Public Policy Today CSPAN March 9, 2016 11:00am-1:01pm EST
south dakota is a rural state that hosts many unique and critical natural resoursces tha benefit citizens and communities. can you elaborate on the challenges many rural communities will face as a result of expandive epa regulations and what are the economic impacts in terms of job growth and industry investment from the epa rules? >> senator, i think -- you know, part of my concern is that on the water quality and effluent standards that i talked about in my testimony, it's not that we're against having minimum standards, but now we're ratcheting those standards down to such a degree as to be almost infeesable in some cases. you know, i'll just talk about the ammonia standards, we were
one of the first states to include ammonia as a water quality standards. ammonia can be toxic to fish. we agreed with that, we agreed that all of our large cities have tertiary treatment that treat for ammonia and have for many years now. but if we ratchet that level down, now we're going to have to install even more treatments and can we basically the new standards is based not on fish anymore, it's based on mussels. and so i'm going how did the mussels do it when we didn't treat for any ammonia? i'm not a biologist and i don't understand that but what i do understand is that levels are getting down to such a point as to be cost prohibitive and that concerns me because if we do try to comply with those new standards is we're going to be
spending a lot of time and a lot of money that could be spent in other areas. >> nebraska, the department of environmental quality, they discussed the need for streamlining those federal requirements. we're always worried about that unnecessary duplication so mr. pirner, do you agree? do you see duplication reoccurring -- as a reoccurring theme among state regulators as they try to interpret and then try to implement all these federal mandates? >> senator, i'm not exactly sure i understand the question. you mean duplication between the state and epa? >> in many cases yes but also between federal agencies? so it's not just epa that comes down with standards but you have other agencies as well. >> well, we certainly have other federal issues with the corps of engineers, with bureau of land
management. with forest service. so i mean there's many other federal agencies that we believe are infringing on state's rights besides epa, if that's the answer. >> how much time does that add when you're trying to meet regulations? when you have different agencies out there that are -- i would say they're piling on on a number of the regulations that we look at. >> senator, it's certainly of concern. i'll give you an example. in our department, we're a relatively small department. our clean air program i think has 14 fte in it for the whole state. when the clean power plan came out we took two of those people and they have been working -- they worked when it first came out and we were trying to do comments and figure out what was going on and when the final rule came out we has to go through that process all over again
basically we process somewhere around 80 air quality permits per month that are renewals and new and so on. i had to take two out of the 14 fte out of that process to devote to just the clean air plan. >> in your testimony you talk about the epa's rule to regulate coal ash and yo note the new rule will preempt the existing sollist waste permit that's currently administered in your state. it's my understanding the epa is encouraging states to amend their state solid waste management plans. are you concerned about the timing for that? >> yes, senator, very much so. again, we believe our existing solid waste permit was adequately protecting the environment. now there's a host of new requirements that somehow we have to merge in with that existing permit and try to
figure out how to do that in the least disruptive manner to both the agency and industry. >> are you limited in your flexibility? >> all i can say at this point is our negotiations with a region 8 are on going. >> thank you, mr. chairman. >> thank you, senator fischer. senator gillibrand? >> thank you, mr. chairman. ms. markowitz, new york and vermont share lake champlain and both are part of the lake champlain basin program. working with epa to improve the quality quality of lake champlain is important to both our states. it's my understanding that the epa and state of vermont have been working together to establish a new total max many up daily load for lake champlain. could you elaborate with how the epa has worked with your agency for this agreement? >> thank you, this is a perfect example of an issue that could have been seen as an each reach but instead really has ended up
with a path forward that offers us flexibility and an innovative approach to cleaning up our waters. lake champlain suffers from terrible algae blooms from phosphorous pollution. unlike in the '70s and '80s, it's not because of what's coming out of the waste water treatment facilities as much as it's coming off the landscape. so rather than being point source, it's nonpoint source pollution. precipitation driven pollution. so as we were working on a new tmdl for lake champlain, is we've been working on it for four years, they could have just done it on their own but they engaged us, they understand if we were going to clean up the lake we had to be involved because we understood what it would take to engage municipalities and farmers and business owners and developers and our transportation treasury department in managing storm
water driven pollution. it's been tremendously successful. we're waiting for the tmdl to come out. we already have a plan to implement that's been passed by our legislature including some funding and i'm happy to share it in more detail to any of you because i think it's the gold standard for this cooperative federalist approach. >> in your written testimony you wrote "pollution does not honor state lines," which is why you see the value of having national standards. and mr. mersicalili, you described that our most important responsibility under the clean air act is to protect the health and welfare of citizens throughout the country from the harlful effects of air pollution. could you discuss examples of how pollution in one state affects the health of citizens in another and from your perspectives as state environmental regulators is the
health in the citizens of vermont, delaware or anywhere protected from having standards that limit the amount of pollution that can be emitted into the air we breathe? do you agree the epa has not overstepped its authority using the clean air act, the clean water act and other federal environmental laws that are based on what science shows to be necessary to protect public health and the environment? >> northeast is the perfect example of states suffering from air pollution transport. each yay has come up with a transport rule recently to allocate responsibility and establish how much each state contributes to the other, we happen to think they haven't gone far enough. we think they need to -- the epa needs to do more. some of the transport steps were
due to us about five years ago. so i think the deadlines you see here are the result of things not getting done when they were supposed to get done, so absolutely i think epa should do more in this area and i think we stand to benefit from that. we can't meet air quality standards. right now in practice we are -- over 90% of our air quality resources have been allocated to upwind states. i can't come into compliance without help. >> do you want to add to that? >> well, that's our experience as well. we are barely in compliance in a number of parts of vermont and, of course, we have no contributing industries so, again, it's all upwind states. we have tried to negotiate. we've tried to sue. epa's had rules on the books and we're very pleased that they've come out with compliance
deadlines because that will make a difference to the health of the people of the state of vermont. >> thank you. >> thank you, senator gillibrand, senator sullivan. >> thank you, mr. chairman, i want to thank the panelists for their testimony on a very important topic. i think it's very clear on this committee we're all very committed to clean water, clean air, there's been a lot of focus on the flint issue. certainly nobody wants to have our drinking water have poison in it, so the issue of clean water certainly has come up because of that. i am really interested in having to work with my committee members in my state. we have entire communities in alaska that don't have running water, that don't have flush
toilets. thousands of alaskans, americans which i think is outrageous and i certainly want to work with this committee on not only addressing flint but other places that don't have any of the benefits that most americans just assume they have. we don't have that in my state in a lot of communities and it's something we need to fix, not just in other places in the country. but mrs. keogh, i want to follow up on your -- i think your statement sums up frustrations that so many of us have where you just stated where the epa stated "because we can." can you elaborate on that more? i find that remarkably arrogant i find that -- an agency that certainly dismisses the rule of law i think there are example after example after example and
it's not just members from this committee. i'm always surprised why this committee on a bipartisan basis isn't more focused on making sure federal agencies follow the law, right now the epa in the last two supreme court terms lost air regulators case. lost the epa versus michigan case. have a stay on the case where over 30 states have sued and in an unprecedented action, the u.s. supreme court put a stay on the clean power plant. so the epa is losing every single major rule that they are undertaking in the courts with obama administration officials, other officials who are federal judges saying the epa is overstepping its legal bounds and you may have seen what gina mccarthy said on tv on the eve
of the "epa v. michigan" case when she asked if she thought they were going to win the case she said yes, they didn't. but then she said "even if woe don't with the case it was three years ago, most of the states, companies are there are in compliance, investments have been made. we'll catch up." so it's like hey, even if we lose we win because everybody had to abide by the law. i think that's outrageous and it's the source of frustration that so many americans feel and can you just elaborate on this "because we can" quote. i just find it the height of arrogance just for everybody's information, the epa is supposed to abide by the law and the federal courts are showing in the last three years they don't. "because we can" is not an appropriate answer. on people who work for you. >> senator, thank you. it is disheartening.
we as state regulators found ourselves in that position everyday as we affect regulation to make sure that we follow the law that's set forth. >> of course. that's what we're supposed to do. >> we don't create law, we uphold the law. it's frustrating as we sit. admittedly i had short notice this federal plan was coming at the time so i felt like it was a genuinely honest question to understand so i could communicate effectively why requirements were being added to the state plan and it was very disheartening at a minimum and very frustrating or perhaps violation of trust to answer it request "we can." >> so they didn't attempt to cite a law or a regular? they just said "because we can"? >> the discussion went from a statement where arkansas made that we are on a glide path with the regional hayes rule to advance and comply early and
that we were doing everything under our state plan that was required under the law. they went in and then beyond that statement discussed a provision about rate of progress and how they could require additional requirements under this phrase of rate of progress and we questioned that when we have a rate of progress that already exceeds -- shortens the timeline and we achieved compliance early so it became of a bit of a circular conversation to be honest with you. it was around there's a phrase in the law that says we can go beyond bart sources to seek a better race of progress and that was where they left it and we did not end with a positive outcome at that and obviously we continue to discuss that with epa today. >> mr. chairman, do i have time for one more question? i see there's no other members. >> you don't have time. but go ahead. >> i want to follow up on the issue of consolidation --
consultation. one of my frustrations, i had been the attorney general in the state of alaska and the commissioner of national resources but we often found consultation either didn't exist or was cursory and yet in every statute that we're talking about the clean air act, clean water act, every epa-focused statute, the consultation requirement is not optional, it's mandatory. so i would just like any of the witnesses here to -- if you have a sense on do you see the consultation more as a box check when you indeed get it or do they try to listen and implement your concerns? because one of the things we've seen, there's a one size fits all rule from washington rarely works, whether it's alaska or vermont or arkansas or south
dakota so i'm wondering about your experience with mandatory consultation there all the laws, it's mandatory. do you feel that you're getting that enough? maybe i'll start with mr. pirner. >> senator, i think it's more of they check the box in my opin n opinion. a lot of these proposals that come out there's a public comment period, we comment along with everybody else but in n this example of the clean power plant, they received 1.6 million comments so if you're talking state to federal agency consultation process, i wouldn't consider submitting one set of comments as being state to federal agency consolidation. consultation. >> anyone else on the consultation issue?
>> if i may, i co-chair a committee at the national association of clean air agencies and i can tell you epa is present on every call. they attended and that's not just with my committee but other committees where an organization has the presenceov of epa staff they share early drafts, explain -- so that may be a good place to plug in a conversation with epa could they do better? in some instances yes. we hear there's friction and tension between guidance and flexibility, you want the rules, i understand, you want to the go to rule makings, rulings are rigid so be careful what we ask for and make sure they can produce what it is that we want. so the rule s set minimum standards, and the rest of it is
our responsibility to collaborate and cooperate and get done. >> i would add to that, i'm on the executive committee of the environment a an council of the states and epa is at every meeting and comes on to monthly calls if we ask them to so as described by ali, that i've made themselves remarkably available to us, in our region as we're developing our performance partnership agreement they also in region one at least are offering tremendous flexibility in terms of how we're going to be managing our obligation under our delegated programs. of course they could do better. one of the places there's a difference between listening and agreeing so i think they do a great job listening, they don't always agree and that's the -- that's really, i think, in part
some of the frustrations you sometimes hear from my colleagues. they tend in this administration -- we dend to agree with them more so we're not dissatisfied with the level of attention we're getting from them in this dialogue. >> do you have any thoughts on that? >> senator sullivan will have to chop it off here, your five minutes are over. >> okay, mr. chairman, thanks. there's no one else here so i was just wondering -- >> i know that senator boxer wants to have the extra time if you use it. >> i mean usually most committees if there's no one else here and it doesn't -- there doesn't seem to be a big ask. >> who hasn't answered a question. >> i'll submit questions for the record. >> all right, thank you. senator boxer, take whatever time you're comfortable. >> that's very sweet of you. >> thank you. >> now i just want to talk about the courts because my colleague senator sullivan raised the
issue. we looked it up. epa has won 70% of the cases before the supreme court and as a matter of fact in the 30% they lost, sometimes they lost because they were not doing enough and we can send you the memo on that because i think that's important i also think it's important to reiterate a fact clearly that should be in evidence. this is one nation you shouunde indivisible with liberty and justice for all. we know that. so to think that the federal government would not be an important partner to the states is wrong. now i know some of you say it's fine for them to be a partner, but i want to pick up on whether what mr. pirner said. because it's very clear, this be has been a great panel, by the way, all of you have been so articulate and it's been very interesting here. but mr. pirner you said in the '70s we had terrible air
pollution and it's understandable, it made sense to cut the pollution and now you said things are so much better epa is going too far. that's essentially what you said. and i have to give you some facts that i'm going to put in the record with the chairman's agreement. and this is pornimportant. 11 million americans have copd, chronic obstructive pulmonary disease. 11 million. 27.6 million americans have asthma including 6.1 million children and there are 1.68 million estimates new cases of cancer in 2016. so to sit there and say that there's not work to do, it seems to me strange and you're in such an important position to help those people. now, maybe they -- you know, some of them live in your state, some of them live in a
anybodying state and to say that you have a great relationship and they'll be fine, it's not a fact in evidence. ms. keogh, you're here, you're giving testimony to this committee and it's got to be truthful and i know you were. so over the next week, please send me the name of the person who told you, the name of the person who said "we are ordering you to do this because we can." i want the name of that person because whoever said that was absolutely wrong and i don't want just
minute money standards. the pollution for my state may go to another state. i have an obligation and we have 40 million people and a lot of pollution a lot of industry. we try our best, we do have for two rest fires, we have natural disasters so we have abon ligation and my state doesn't complain about it, they just
clean up their act. and it's just a function of what is right. what is morally right and you can measure the progress as you look at the health of the people. this is not some conversation about the meaning of the 12th amendment, the 10th amendment, the first amendment. it's about the health of our people, we should do everything we can to protect their health and as long as i'm vertical that's what i'm going to be working on. thank you. >> well, thank you, senator boxer, anything else? >> no. >> okay, all right. let me just make a final comment here that it seems like every time we have a hearing it ends up to be a global warming hearing or at least that's injected into it. let me just share my personal thought that climate is always changing. i've said this on the senate floor. i can't remember, i wasn't alive in 1895 but in 1895 we went through a period where they first started using the --
another ice age. in 1918 they started using this is the first time they used global warming and then, of course, that changed again in 1945 when that was -- another ice age. and then that changed in '75. so about every 30 years this happens it's always been changing. the interesting thing is in 1945 that was the year they had the highest co 2 emissions in the history of this country. recorded history. and that precipitated not a warming period but a cooling period that sustained for another 30 years. so i think that has to be said. i know the public understands that now. i can remember back when i was the bad guy and we were talking about this back in 2000 and at that time it was considered to be the number one concern, now it's number 15 out of 15
according to a poll. so people have caught on and they'll continue to bring that up. last thing is we all want a clean environment and when you mention the clean air act and all these other acts, we were all for them and i was back then. in fact, i was if initial sponsor of the clean air act. so with that we'll adjourn. i'd like to have one quick short words with ms. markowitz if i could. >> all right, barbara. >> that was good. >> i think so.
you can watch this hearing on epa regulations again as well as house and senate debate on the issue and other programs about the epa. go to our web site, cspan.org. coming up later on c-span 3, a hearing on the president's budget for indian country which includes native american tribes and programs, federal officials from hud, justice, interior and health and human services departments testify along with a
representative from the national congress of american indians. live coverage starting at 2:15 p.m. eastern time. and on c-span this afternoon, agriculture secretary tom vilsack goes before a senate appropriations subcommittee to talk about his agency's budget. again, that's live on c-span at 2:00 p.m. join us this thursday for life coverage of the white house state dinner for canadian prime minister justin trudeau. beginning at 6:15 p.m. eastern on c-span. housing and urban development secretary julian castro testifies on capitol hill about the president's 2017 budget request for his agency. he highlights affordable housing, homelessness, long term and short-term hud grant programs and internet access for
applauding because you're leaving but after 29 years of federal service i will tell you personally i have thoroughly enjoyed working with kate as she is incredibly knowledgeable on transportation issues, her dedication to this committee and to the members of in kblit tee has been unwaivering. every -- again, i consider her a friend and kate you will be deeply, deeply missed. now we should be able to applaud i think, right? [ applause ] and i also want to congratulate dzohkhar lyle who will be taking over as minority staff director. we all know him. he's been a valued member of this team with deep understanding of this bill and so joe congratulations, look forward. to working with you and you have a big -- you have big shoes to fill but you're ready. kate, love you, i'll miss you. miss you already.
>> will the gentleman yield? >> yes, sir. >> let me add to that. she has been a stalwart worker in this cause for a good while and we are going to miss her. in the next chapter of your life, good luck. good speed to you: >> thank you. you know, why don't we do something very briefly, ranking member. why don't i yield to the ranking member and ms. lowey very briefly. >> i'll have something in my statement. >> well, i had something in a statement but i think it's so importa important. i'd rather begin at this point because i have known kate hallahan for a very long time. in fact, my middle daughter was
deputy in the department of transportation years ago and she told me all about kate. 29 years 29 years of government service. she is dynamic, she is hardworking, she is dedicated and she has spent and incredible portion of that career dedicating herself to this subcommittee i always say kate, you're the answer woman. you ask her a question, she knows the answer and if she doesn't, boy she gets it for you quickly. how fortunate we have all been to have the counsel of kate and, kate, i just wish you good luck and i know we will all stay in touch, we will all miss you and i know you will continue to succeed in whatever you decide to do even if it's just enjoying
the day and the sunshine. so thank you so much, kate, we love you, we appreciate you and we support you in everything you want to do in your future thank you. >> thank you, ms. lowey. and mr. secretary thank you for your indulgence. it's a special bittersweet day for all of us. we welcome secretary julian castro from the department of housing and urban development to discuss the fiscal year 2017 budget request. hud is requesting a total of $49 billion in new budgetary resources in fiscal year 2017. about 3.5% above 2016. this is not a dramatic increase. unfortunately, however, there are some so many accounting gimmicks in the budget as a whole that it makes it difficult to frankly take any of it very seriously. we don't need to look further
than, frankly, other agencies funded by this subcommittee to demonstrate that point. as we saw in the previous hearing, the department of transportation's budget uses gimmicks to cheat the bipartisan budget agreement by nearly $10 billion. however the appropriations committee must abide by the agreement so the administration is only, frankly, cheating itself out of the opportunity to communicate its priorities. the appropriations committee must pass bills within the discretionary caps that we have agreed to in last year's budget deal and we can not depend on accounting gimmicks to do so. so even in the hud request itself we find evidence of the administration gaming the system and breaking promises made just last year. like dot, hud proposes billions of dollars in extra spending by classifying new programs as mandatory. look, spending is spending
regardless of how it is categorized. just because you call it mandatory doesn't mean it won't increase our national debt. even more frustrating, however, is the lack of specifics. mr. secretary your request makes a commitment of over $11 billion in new programs for which you provide no details, no legislative language and not much more than, frankly, lofty talking points and wishful thinking. so don't get me wrong. i represent low income and urban areas and i support the spirit of hud's mission and if desire to always try to do more. my mayors and city councils and community leaders and constituents rely on hud programs. but that's why it's so important hud gets real about its resource challenges to help the subcommittee identify which
programs must be made priority in this next year. in addition to targeting the right priorities, it's so critical hud be a good steward of its resources. as nearly all of what hud overseas helps the most vulnerable and deals with the most vulnerable. yet i continually receive reports, i continue to receive reports that hud has tremendous difficulty with basic management the number and seriousness of negative inspector general reports is frankly astonishing. poor financial control, possible anti-deficiency acts violations, lax program oversight. major risks to it systems. major gaps in cyber security. the list goes on and on and on. now you see i want to work with the administration to make hud the high quality high functions
organization that it must be to oversee these important programs. if the department remain this is dysfunctional, frankly, what hope is there that we can tackle homelessness? that we can tackle economic stagnation and all other major challenges that are part of hud's mission. i look forward to working with you, mr. secretary and i think we enjoy a great relationship and great communications so i look forward to working with you as we make the hard choices necessary to meet our nation's housing and economic development needs all while being accountable to the taxpayer and respectful of last year's bipartisan budget agreement that again we were bound by. now, before we go to your opening statement, mr. secretary, i would now like to recognize the ranking member of the subcommittee, the gentleman from north carolina, mr. price, for his opening statement. mr. price, you are recognized, sir. >> thank you, mr. chairman.
i want to join you in welcoming our secretary of housing and urban development, huejulian castro, glad to have you with the subcommittee. i also want to say a few words about our retiring democratic clerk kate hallahan. we hate to see her go, as the remarks of other members have indicated. you've heard about her past 29 years in public service. i think of kate as the model of what public service is about. she started on the hill in the office of representative al swift of washington state, worked at the department of transportation then at the senate appropriations committee before she joined us and settled down for a in 2016. kate simply has an expertise in transportation policy that's unmatched. she also knows the hill very well and the appropriations process very well.
and she knows everybody. everybody knows and likes kate and admires her and respects her. she has that network of personal contacts which let her be very effective and find out the question that anybody raises very quickly and effectively. she's tireless, determined, creative in finding ways to get the job done, even against formidable odds, as they often are formidable. she does it all with terrific good humor and a cooperative engaging manner so i i am really sorry to see kate go. we all are. we wish her well. she's earned this retirement. still, we're going to miss her so congratulations and godspeed. now, turning to the request before us, the fiscal 2017 hud budget request provides $38 billion in resources, that's
$628 million reduction from last year's level. the lower number comes from higher anticipate red seepts although i think that number is likely to change once cbo scores the request. as was true with the department of transportation, the constraints of the budget agreement which only partially corrects the distortions of sequestration mean that it's likely the bill we put forward will not sufficiently address the known needs of housing in our communities. an estimated three out of four eligible low income households do not receive federal rental assistance because of funding limitations. it's well known that most public housing authorities are overwhelmed with multiyear wait list lis lists for access to subsidized housing so the resources available make it virtually certain we can only address the most pressing needs rather than thinking boldly about the future of housing in this country. underscoring this reality.
more than three quarters of this budget request is did kated simply towards maintaining current tenants in housing. in this budget environment, simply keeping pace with our existing obligations is a channeling task. we know we have a maintenance backlog of over $25 billion. that's $25 billion in our nation's public housing stock. unfortunately in this era of fiscal fundamentalism, providing the budget resources to eliminate this backlog is impossible. even the more manageable goal of keeping up with the annual accrual needs, about $3 billion for the public housing capital fund each year remains out of reach. our states are struggling to e provide housing and opportunities for people with disabilities but this budget would provide no resources to provide new housing if this vulnerable segment of the population. similarly, we've built no new section 202 rental housing for the elderly for years.
this budget wouldn't change that. even after the disaster in flint which exposed the dangers of underinvestment in our infrastructure and the persistent threat of lead in many communities in budget requests flat funding for lead has reduction. in fact, in fiscal tweefrt the department could only fund half of the applicants seeking to remove the present of lead from their local housing stocks. i hope this request reflects a belief inside the administration that congress intends to deal with this issue rather than a belief that we do not need increased resources to address this health hazard. simply put, this budget request lays bare the difficulty of allocating sufficient resources for our housing and community development priorities. especially when the majority continues to insist on misguided and arbitrary constraints on discretionary spending.
meanwhile -- and this is the irony -- mandatory spinding and tax expenditures which are the primary drivers of our long-term deficit, remain unaddressed. now there are a few bright spots and i'll close with those. despite these concerns, the choice neighborhoods initiative, for example, a program that revitalizes and transforms communities by modernizing aging public housing that receives a modest increase. they also ask for $88 million for resources for homeless families with children and to confront the challenges of housing in indian country. the request includes targeted increase in programs for native americans to improve living conditions to provide economic opportunity. i'm also pleased the budget request proposed to update the statutory formula for the housing opportunities for people with aids program. to ensure limited federal resources are allocated to
jurisdictions with the most need. i'm hopeful hud will work with me and members of the authorizing committee to ensure an updated formula is passed into law during this congress. so mr. secretary i look forward to working with you on these important programs. thank you, mr. chairman. >> thank you mr. price. it was always a privilege to recognize the chairman of the full committee, the gentleman from cry cry. >> thank you, mr. chairman. >> thanks for the introduction. mr. secretary welcome to the kate show. [ laughter ] we're delighted to have you with us to talk about your budget request which as the chairman has said is $48.9 billion in discretionary funds which is a current levels. but additionally as has been said, you've requested $11 billion in funding for new
programs on the mandatory side of the ledger. that alone is shocking. but the fact that the administration is proposing new mandatory programs this has been a troublesome and recurring theme across the budget and i've conveyed a similar message to your departmental colleagues in the last two weeks. in december we came to a bipartisan agreement with the white house on spending caps for the fiscal year and we simply can't afford and will not tolerate efforts to circumstance vent those caps by putting these funds on automatic pilot in the mapped toir column over which we have no control.
congress fall lowed the law and stay within the caps on the bill. i hope the message is clear that this committee is committed to staying within those caps for 2016. if these programs are truly priorities for the administration, we'll need to find a way to make it work within the agreed upon framework. we look forward to working with in that regard. we've been working on our regional development to help my area yeah which has been hit hard with a loss of over 10,000 mining jobs since the president took office. one program that provides a true benefit to struggling regions like mine is the committee
development block grant program. incredibly popular and effective because it provides flexibility to address unique community development needs from town to town, county to county and these are often leveraged over times to carry out projects that otherwise would not get started. they've been used to create jobs through the expansion and retention of businesses. i was disappointed to see the cuts proposed in the administration's proposal. i would be remiss if i didn't mention my concern over the self help ownership opportunity program. for the past few years they've
moving shop into the program and congress has kept it as its own lie item. this year again you proposed moving it under home. this allows low income home buyers to contribute significant amounts of their own sweat equity toward the construction or rehab of their homes. this allows many low income families, the otherwise out of reach opportunity to own their own loam and provide their children with a safe and sanitary place to live and play and grow. the huge impact this program has across the country justifyings it remaining an independent program. we look forward to working with you over the next few months. we want to be helpful. we appreciate the service you're giving to your country and the we look forward to working with
you. i yield. >> thank you, mr. chairman. great privilege to recognize the ranking member of the committee. >> thank you, mr. chairman. i want to join my colleagues in welcoming you, secretary castro. thank you for joining us today. mr. secretary, hud's budget request includes some bright spots, including 20.8 billion for ten gnat rental experience, $200 million for the choice neighborhoods initiative of 75 million or 60% increase over fy 2016 and $88 million for a new program that would fund 10,000 new vouchers for homeless families with children. i was disappointed by not only a
1% decrease in hud's overall budget of $328 million decrease from fy 2016 but also some significant cuts to programs that our constituents depend on, a cut to the committee development block program. it also plat fronts the home program as well as the led hazard control and healthy homes programs at $110 million with $83 million for led hazard control grants and $25 million for the healthy homes program respectively. this funding, as you heard from my colleague and the ranking member is just not adequate or sufficient to meet our country's actual housing needs. led hazard control has made tomb
strides in eliminating household toxins that affect our communities, resulting in lower led rates, better educational outputs for children. work remains to remove the lead from the homes of millions of families. now is not the time to flat fund it. many communities throughout the country lack ad kwat safe funding for all housing levels. the housing sector must play a big role in strengthening and growing the middle class, empowering hardworking families and providing economic opportunity for all americans. i look forward to working with you, secretary castro and to listening to your testimony today. thank you, mr. chairman. >> thank you very much. mr. secretary, your full written testimony will be included in the record. with that you're recognized for
five minutes. thank you again for being here. >> thank you very much, chairman diaz-balart, to the ranking member price, to chairman rogers, ranking member lowey, and members of the subcommittee. thank you for inviting me to discuss hud's proposed budget for fiscal year 2017. our request honors the president's commitment to provide more americans with the chance to secure quality and affordable housing. and to use housing as a platform that sparks greater opportunity in people's lives. this proposal comes at a time of tremendous momentum for the american economy. the unemployment rate has been cut in half since 2009. over the past 71 months, businesses have added 14 million jobs, the longest streak of private sector job growth in our nation's history. now we must ensure that this progress reaches every corner of our nation. and expanding housing opportunity is a vital part of this mission.
today, one quarter of american renters spend more than half their incomes on housing and for every dollar that goes toward a rent payment, one is taken from a family's grocery budget, a child's education, or a couple's retirement savings. that's what the president's budget calls for increasing hud's funding to $48.9 billion. $1.9 billion over the enacted level for fiscal year 2016. 85% of our budget would go solely toward renewing rental assistance for nearly 5.5 million households. but we've also taken strong steps to maximize our remaining resources. investments that would support our nation's most underserved communities and empower more hard-working americans to lift themselves into the middle class. six years ago, the president set forth a bold vision to end homelessness in america.
and since then, we've made great strides. the best example of this, a 36% decline in veteran homelessness, between 2010 and 2015. i want to thank the members of this committee for funding hud bash over the years and with your support, we can fully achieve the president's vision and help the next generation to escape the cycle of homelessness. hud's family options study offers clear evidence that the skro vouchers are the most effective solutions for families with children experiencing homelessness, so we've asked for historic $11 billion investment in mandatory spending over the next 10 years that would use these tools to assist approximately 550,000 families. we've requested $20.9 billion for our housing choice voucher program. an increase of $1.2 billion from the enacted level from fiscal year 2016. this would provide 2.2 million
low income families with a chance to move into neighborhoods with better schools, safer streets and more jobs and stay there for the long term. but hud's mission also extends beyond housing mobility. too many communities remain segregated by race and by income and too many americans see their futures limited by the zip code where they were born. and hud's proposed budget reflects our duty to revitalize underserved communities. our rental assistance program has already leveraged nearly $2 billion for crucial repairs in housing and other hud assisted property. we've asked congress for $50 million to make targeted investments in 25,000 new units and eliminate the remaining caps on the number of units eligible for conversion. which improves infrastructure, rehabilitates housing and
creates jobs for folks with modest means. and $200 billion for folks in choice neighborhoods which helps to transform areas of concentrated poverty by creating quality mixed income housing and sparking neighborhood small business growth. finally, the president knows that many native american communities face significant barriers to opportunity. this budget requests to improve housing and development on tribal lands including 20 million for native youth programs like community centers, health clinics and head start facilities. the president's budget reflects his determination to promote inclusive opportunity for all americans. i look forward to every american can live in a home that offers them pride, progress and hope. thank you. >> thank you very much, mr. secretary. we will proceed with five-minute
rounds, alternating sides, recognizing members in order of seniority as they were seated at the beginning of the hearing. please be mindful of your time and allow secretary castro the time to answer it within that five-minute period. >> mr. secretary, as i alluded to in my opening statement, the hud office had to express a disclaimer on hud's financial statements. billions of dollars improperly accounted for at cpd and tens of billions in other problems at jeanie may. it would be bad enough if it was one year but it's terrifying a
financial institution as important as hud can't get a clean bill of health from its auditors two years in a row. please, as simply as you can, can you just explain what's going on with hud's financials? >> thank you very much for the question. the audit you're talking about is one we take very seriously. let me begin by saying we have a close working relationship with our inspector general. we meet on a regular basis and this is of course one of the items that we have been working on together. you're correct that we had a disclaimer in 2014 and in 2015. i'm pleased to tell you that ginnie mae has been working. it has filled key leadership positions. it has revamped several of its processes. improved the way that it does business. i also want to assure you that i have made it very clear to all
of my staff that we take the recommendations of the inspector general seriously. in fact, i know that ya'll are going to have an opportunity to meet with the inspector general soon and he and i meet on a regular basis. it's fair to say that there are very few instances at hud, whether it's this audit or others, where we are out of sync with the inspector general. and in those instances where there is a difference of opinion, there's a concrete reason for it. so in 2014, we had 11 material weaknesses in our audit. in 2015, we brought that down to nine material weaknesses. we believe in 2016 we'll be able to bring that down further. we're making progress and we'll continue to work with the inspector general, with gao and others to improve our systems and ensure the audit improves as well. >> hud is operating without a
permanent cfo. any idea on when you think that might be -- that critical position might be filled by somebody who can, you know, again address these issues? >> you bring up an issue we have been working on. this is something our deputy secretary herself has been attentive to. and we very much are working towards filling that position. we believe it's important. i don't want to give a time line right now in the sense of -- we believe in the next several months but hopefully sooner that position will be filled. it's something we work on. >> the first in, first out, fifo accounting is one of the biggest reasons for the audit disclaimer. it appears hud is violating requirements because of this
faulty accounting. the ig believes these accounting mistakes meet the definition of a violation. which would mean you're frankly spending money you don't have. have you been able to investigate? have you investigated the aig's findings to determine whether hud's breach is in fact -- of the home statute is in fact an anti-deficiency act violation? >> you know, we over the last year in fact have reported from the past 14 anti-deficiency violations that hud had engaged in in the past. in an effort to get beyond those, we've improved our processes. in fact, i think it's fair to say that today in 2016, the challenge at the end of the year is often -- at the end of the fiscal year is often trying to ensure that money that has been
appropriated is spent because of the anti-deficiency act situations that were encountered in the past, many of our program areas are shy about spending towards the end of the fiscal year. we're improving our processes so we both hit our mark but do not commit a violation. i'd be glad to get your more information on the specific one you're talking about. >> appreciate that, mr. secretary. again, sticking to the time limit, mr. price, you're recognized, sir. >> thank you, mr. chairman. mr. secretary, let me ask you about -- oh, i'm sorry, yes. i'm reminded that our ranking member of the full committee has another engagement. i'm to yield to her. before i run my mouth any further. >> it is a good thing for you to remember. >> we have a partnership here. and i know the chairman and i need roller states these days,
there's about five or six hearings a day, but you're very gracious. thank you so much. and thank you, again, for your testimony, mr. secretary. mr. secretary, the criminal incompetent that resulted in tens of thousands of american citizens in flint consuming led contaminated water is shocking. historically, lead paint has been the most widespread source of lead exposure. much of the success we've had in reducing exposure to lead has been in a partnership. each providing expertise and resources. however, of the past few years, funding for the lead has a control and healthy homes programs has been flat funded at $110 million with $83 million for lead hazard control grants and 25 million for the healthy
homes program respectively. down from $140 million just five years ago. and we know the job has not been done. with millions of american homes still containing lead based paint, i'm concerned your budget just does not address the serious need. are the resources that have been provided in this bill sufficient to fund the need for this program? for instance, how many grant applicants are turned away due to the lack of funding? how does the department prioritize who receives these grants? and what other sources of funds are available to remove lead paint from homes? >> thank you very much for your focus on this miss lowey.
what happened in flint was a shame. at the same time, we know this administration has marshalled a lot of resources to try and do what we can to address the needs of the residents of flint. hud, in fact, is involved in that response and has had somebody as part of the strong communities program on the ground in flint for over a year. but let me just address more specifically your questions. i wish that i could say that the resources that hud has received in the past met all the needs. as you heard earlier in testimony i believe that we're able to serve about half of the eligible applicants in the program, the lead hazard control program. in fiscal year 2015, there were 47 eligible applications. about $141 million of requests that went unfunded. so you're correct that the need outstripped the resources that we have.
there are other resources aside from this grant that are -- that can be used to address lead issues. one of those, for instance, is cdbg, community development block grants can be used. i wish i could give you the impression that these resources can meet that need. they cannot. it's true that we've had to make tough choices in the budget. as i mentioned in my testimony, 85% of our budget requests is just -- is re- upping the folks we are already serving. what that has done over time is put more and more of a crunch on everything else. what it's been cdbg or lead hazard control grants. we continually look for more ways to make these resources go further, for instance, whether through reaching out to philanthropic organizations or providing technical assistance to local and state communities.
you also asked about the process itself. being, it's a competitive process. so in terms of prioritizing, we look for those communities that have the greatest need and also put together compelling plans on how they would address lead based paint in that community. >> now, you have about 56 -- maybe we should talk about the healthy homes program another time because you've been so gracious to give me the time and i thank you and thank you, mr. account is, i appreciate it, i look forward to working together. >> thank you, miss lowey, again, for being so consideration with your time, it's greatly appreciated. general rogers. >> i don't think he got to finish -- >> i'll take the time that miss lowey would have, that's fine.
>> found that there are more than 25,000 high-income earners living in public housing.o2> yes, thank you, chairman rogers for the question. of course, this did receive a lot of attention and i want to let you know very plainly this is a concern we share. i'm pleased to report we're working hand-in-hand with the inspector general to address
this issue, and so we've done three things. first on september 3rd of last year, we sent a letter to all public housing authorities strongly encouraging them to adopt policies that would transition out, extremely over-income individuals like some of the ones highlighted in the inspector general's report. on september 8th, just a few days later, we published the fiscal year 2015 flat rent notice which is going to result in a rent increase for most families playing flat rent and may lead them to choose market rate housing, give them that extra incentive to move on. and on february 3rd of this year, we published an advance notice of rules making. to strengthen oversight of over
income tenancy in income housing and ensure people residing in public housing continue to need housing assistance from hud after admission. and this may be the most important part of our response. this advanced notice of proposed rule making gives us the opportunity to seek feedback and to ensure we go forward with a rule that will address the concerns the inspector general raised. if i may, the last thing i would just briefly say is that while i do agree that these housing authorities need to be tougher, especially in the cases that were highlighted in the report, i think through conversations with the hill, with i think staffs of different congressional representatives, also as reflected in chairman's bill. sometimes get barely over that limit.
they become self-sufficient. you also want to encourage folks to work their way up so they can get up and out. and so we need to encourage them to work harder and increase their pay so they can move out, but not cut them off the second that they do that. and disincentivize them from actually getting a pay raise and becoming self-sufficient. there is some nuance in here and i think that's reflected in the legislation being considered and the conversations we have. we hope that will be reflected as well in the final rule. >> is the 25,000 a fair figure? >> the inspector general did find just over 25,000. out of 1.1 public housing units, yes. >> but you have no argument with the number? >> we don't have any argument with that number. what i would point out though is the vast majority of those were
barely over the income limit. and some of them fall out of the income limit and back into the income limit. and this is i think what we need to address successfully in crafting a rule and we welcome the feedback of members of this committee and also have been enjoyed working with others who have asked, including chairman luchameyer and his staff. >> what's the -- >> for which part? >> the new rule you're talking about. >> we anticipate that -- we've done the advanced notice of proposed rule making and so the next step will be a notice of proposed rule making later in 2016 and i anticipate that in 2017 we would have a final. >> well, i understand your point about not cutting them off the next minute, but that income rule is there for a very real reason. and there's 500,000 qualified families according to the inspector general waiting to
move in that are qualified under the income level. so it's not fair to them. you agree? >> no, you and i -- we don't have a disagreement there and that's why as you can see from these steps we've moved forthrightly on this to address it. >> thank you. >> mr. price, you're recognized, sir. >> thank you, mr. chairman. mr. secretary, let's turn to the choice neighborhoods initiative. this is a program that transforms aging public housing developments into vibrant communities. it's a unique program in the hud portfolio in terms of its reach and scope. builds on the success of the hope 6 program which i know firsthand made a dramatic
impact, particularly in raleigh, our capital city in north carolina. congress has provided fund for choice neighborhoods since fiscal 2010. of course been proud to support it but want to ask you to reflect on how we can improve this program, what kind of a success we've had so far. i wonder if you would cite particular successes, either now or for the record. are there particular cities, communities, that demonstrate how choice neighborhoods can work and how, in your view, it should work? secondly, how -- how close are we coming to meeting the demand for this program, the meritorious applications that would make good use of these funds? how many applicants apply for each round of implementation grants? how many were awarded? what's the level of meritorious applications not awarded? can you give us just some sense of what kind of demand you're dealing with? also with the implementation grants, the grants that actually carry out the transformation we're talking about, what kind
of success have you had and have grantees had in leveraging outside funding to supplement this? that's the hallmark of many hud programs of course and wonder how it works here. and finally if you can address the smaller grants, of course they're much more numerous, the planning grants, much smaller, much more numerous, talk about how that's working, what kind of outcomes you've seen there. some presumably lead to implementation grants but all cannot. there's no way all those planning grants could lead to a full implementation grant, so what do they lead to? what kind of evidence you have about the kind of leverage the planning grants give? and what have we seen there in terms of the ability? even if a community doesn't get a limitation grant, the a3x÷ availability to carry forward
with the planning grant and nonetheless carry forward for serious work? >> thank you for your past support and your vocal support of choice neighborhoods. the value of choice neighborhoods really is that it's place-based work and it's breaking through silos. so as you know, building on hope six, this says it's not just about housing, it's all about housing and transforming a neighborhood. what can you do on housing and transportation, housing and education, housing and the availability of fresh food? housing and the environmental conditions around the housing? a couple of good examples of this, i visited neighborhoods in boston. i believe the name was roxbury, roxbury heights, but i'll check
that. they were one of the first choice neighborhood grant recipients. they revamped their public housing. close to the public housing site, they also have an incubator that works on incubating small food-related businesses. folks who sell and package food are able to take up space there and grow their business. it's helping to improve that neighborhood in boston. a second example is the woodland neighborhood in chicago which is not too far from the university of chicago. they've partnered with the university of chicago for instance to help provide some safety, police protection. they've included recreational activities for young people and also opportunities for seniors it they've done it in a way which is great because again
it's not just about providing housing but improving quality of life. you asked about leveraging of other dollars. maybe the best example of this is that in new orleans for instance, in the first phase of the buildout of the choice neighborhood, implementation grant that they got for the housing, at the end of the day, only 16% of those funds came from that choice neighborhood grant. so obviously they were able to leverage other financing to get that housing done. the planning grants, which traditionally have been $500,000 planning grants, are important. and a number of those planning grantees have become implementation grantees. although as you say, not all of them. but they have been a good base from which those communities have either successfully gotten implementation grants. a good example of this was san antonio, my hometown. or they've been able to leverage
philanthropic support or other programs. >> thank you, mr. secretary. mr. joyce, you're recognized, sir. >> thank you, mr. chairman. good afternoon, mr. secretary. >> good afternoon. >> prior to my arrival here, i was a prosecuting attorney for 25 years in jog county. responsibility to represent the county and the townships in how we adapted to local zoning. i have great concern with you permanently furthering fair housing rule or affh rule. using your authority like a hammer. robbing communities of their rightful say in zoning laws. this has caused great concern throughout my district and is what i believe one of the grossest current examples of government overreach. i would like to take a few moments if we could to examine this rule and how in the eyes of your department is equipped. which area of the budget does your department plan to utilize researching, gathering the opinions of local stakeholders? >> are you referring to the work
that we've already done or the work that's going to be done as part of each community's assessment of fair housing as it's rolled out now? >> yes, going forward, where in the budget do you have that plan to take into consideration these communities concerns. >> as you probably know, phas are able to use operating funds. there may be local or state resources that they're able to use. so there are a number of potential funding streams that they could use. >> okay. how is your department's research process structured so that its data establishes an accurate and thorough level of knowledge of each of the local community's wants and needs? and who ultimately will execute the programming from the federal level? >> thanks a lot for that question. this is an important one. this is being done -- the process has been done jointly. this has really been a collaboration across hud to make sure we get it right, because historically within hud there has been this tension between
our fair housing office sometimes and our community planning and development. in other words, cpd giving out the grants and then fair housing sometimes clamping down, having to clamp down. in order to get this rating we got input from the local communities, that was part of the process. and then internally at hud, each of these programs worked together also with the policy research group. you asked about the data and the tools we're going to give them. that was a collaborative process. on december 31st of last year our tool went out to these communities, the 22 communities that were in the first round of sfons. it's more comprehensive than they've ever had.
i just want to point out, congressman, you asked a question that i think a lot of people are asking. >> sure. >> and there is this impression among some folks that hud is going to be very prescriptive. we can't tell a local jurisdiction you have to adopt this zoning law, planning law, or land use restriction. that is not what affh is about. it's about giving these communities the data that they need to make prudent decisions about how they invest these federal taxpayer dollars. and how they also live up to the fair housing act requirements. but we're not telling them specifically you have to do this here or else. we cannot do that under the law. >> to be specific, though, can you give me an example of where this research process has already been employed and touch on its level of accuracy? >> yes. actually there was a pilot program that touched on -- i want to say it was about 30 communities, that was a kind of precursor to affh, where communities drew up these plans with data and stated their own
aspirations along fair housing lines and also how they connect the dots of housing and transit and general quality of life. and so we have a good set of about 30 communities that went through this. there was a benefit to those communities. there was also a benefit to hud in getting to see that process and understand how we can provide good data to these communities and then let them lead the effort to come up with their plan. we do not intend to come up with a plan for them. this is going to be a locally driven effort to come up with these plans. >> thank you. i' i've exceeded my time, mr. chairman, so i'll pass it back to you. >> thank you very much, sir. mr. quigley, you're recognized, sir. >> thank you, mr. chairman. good afternoon, mr. secretary. i'll go back to lead, lead paint, and my hometown of
chicago. as you are aware, we have a lot of incidents relating to section 8 housing and lead-based exposure. since 2012, around 178 children that we know of that have experienced elevated blood lead levels. two thoughts on that. i believe under the current department regulations, the lead-based paint standard for public housing is four times the cdc recommended level. are we working to adjust that through rulemaking or some other process? >> you're correct, and we are working with omb on that. we don't have anything to announce now. but that is something that is on our radar screen and we're working toward. let me just say as well that since fiscal year 2013, that every notice of funding availability for lead assistance grants has recommended the cdc definition of elevated blood lead levels.
so in the work that's being done out there, much of that reflects the cdc definition, even though you're correct, that right now there is a discrepancy between the cdc definition and hud. and we would like to bring that into conformance. >> i appreciate that. i understand the housing agencies are required to inspect the premises before people move in, something like a year after that as well. but as far as i understand, that's about the only way they're determining whether there may be lead-based paint issues. is there something else we can do to determine the level of risk out there? >> well, certainly the communities that are part of our lead hazard control grants are those that have identity issues in their public housing or other
housing. so they're affirmatively addressing these issues and remediating them, along with our funding, it helps to improve the overall health of that household. we're always looking for ways that we can be more effective in the future. so we would love to follow up with you on that. >> yes, i would like to work with your folks in chicago as well. second point, as you know, lgbt youth have an extraordinarily high rate of housing instability and homelessness, more than the general population. and transgender americans are the hardest hit, with one in five transgender americans experiencing homelessness. on behalf of the lgbt quality caucus, we want to thank you and support you for your proposed rule dealing with this issue. it's a crucial step forward in ensuring transgender people seeking emergency housing and shelter are able to find the protection they need. how do you plan to implement this rule? are there specific issues you're
going to have to address? >> well, first, thanks for the recognition on the effort. we believe that this is important. as you know, beginning in 2012, with our equal access rule, we started to address concrete issues that present themselves to the lgbt community when they seek housing and shelter. this rule addresses the responsibility of shelters and single-sex facilities. that is in process right now. and this is something that we're working to get done during this administration. and once it's rolled out, it's also clear that it's going to take i believe quite a bit of partnership with local communities and providers to ensure that this rule is implemented smoothly. i believe that just as the rest of the equal access rule has been, that we can do that. >> and i think some of this is going to be your help in working with communities and shelters on education and some training and understanding specific issues here and how to help people who
are at their most vulnerable point. >> no, i agree. >> thank you so much for your service. >> thank you, mr. quigley. mr. yoder, you're recognized, sir. >> thank you, mr. chairman. mr. secretary, welcome back to the committee. i note you were in kansas city earlier this year. i represent kansas city, kansas, amongst other places. you were there to talk about connect home. i appreciate you coming to our area. i wanted to talk to you a little bit about that program. you know, google fiber came to kansas city and provided a real opportunity, we were one of the first communities in the country to have this high speed internet. one of the challenges that quickly arose is that we have a digital divide. we have citizens, low income
families that have no access to the internet in significant portions. so i guess i just wanted to hear from you, how big is this a challenge across the country? it's certainly a challenge in my community. how much of this is a priority for your agency? and what can we do in terms of public-private partnerships to really resolve some of these discrepancies? this is one of those areas that ought to be bipartisan in particular because this is a bottleneck on access to opportunity. and if we're serious about giving people the tools to succeed in this country, giving them the levers to rise out of poverty, if they don't have access to the internet, it makes it that much more challenging for them. i wanted to turn that over to you and hear your thoughts on those questions. >> i appreciate the opportunity to speak to something that i agree with you, i believe ought to be bipartisan, as other issues have been before this committee. we're very proud of it. number one, this is a great example of a public-private partnership. all but $50,000 of this effort is being invested by the private sector, internet service providers, and nonprofits.
connect home is an effort to connect up residents of public housing in 28 communities, 27 urban communities and one tribal community, the choctaw nation in oklahoma, to the internet, because the fast majority of them are not connected now. google fiber are great participants in this. the idea is we believe that folks of modest means need 21st century tools in order to compete in this 21st century global economy. if we expect them to become self-sufficient. so this effort will connect up to 200,000 children. and we're actively now working toward expanding that. in this budget we requested, because remember, right now it's only been $50,000 plus the staff time that's been devoted to this, we're requesting $5 million toward connect home. for those instances where just
with a little bit of a public investment we might be able to get a community hooked up, because we think those dollars can go very, very far. the fact is almost all of this has been private sector so far. at the end of the day, i believe this is going to mean that we avoid more intergenerational poverty in communities in the united states, so that those kids especially that do get an internet connection, they're more likely to do their homework and apply for college and working age folks who can apply for a job. you're going to improve their upward mobility through this internet connection. >> i appreciate your leadership there. and i appreciate you coming to my community and highlighting that as an important investment for helping children rise out of poverty. i want to turn your attention to your proposal to support the administrative support fee on the fha lenders again. and i'm pleased to see it has a
sunset clause this year. i have a few questions about how it's to be implemented. congress has rejected this proposal. so i'm not necessarily pleased to see it back. but i do have some questions about how you suggest it would be implemented. first of all, it says it would be charged on a prospective basis. your budget also says mortgages that were insured under that title under the previous fiscal year. is this prospective or retroactive? can you explain the disparity? >> it's prospective from when it's enacted. but the fee will be assessed at one point in the year, at the end of the year. or at some point in the year. i think that's what's been described. i don't think i've seen the text you're looking at. i believe that's what's been described. it's going to be on transactions going forward. it's not going to be going backward. >> it states the fee would be calculated based on mortgages that were insured under this title during the previous fiscal year. >> that's right.
if we started it tomorrow, then the fee would be assessed after that one year. and it's talking about going backward to capture everything after it was enacted. >> also under your proposal it says small lenders i think would get hit with a pretty hefty fee because of the complexity of the formula. and i have just two questions here. one, where you base the fees on prior years of business. wouldn't it be better to assess the fee on the mortgage at the time it's made? lastly, your request is for $30 million. you also say the fee could be as much as four basis points. fha is projected to be a quarter million dollars over the three-year life of this provision. what are you going to do with this money, is it the right number? which is it? >> we've actual said between 2 and 4 basis points now, as a recognition of this figure that you cited. and so we're also aware of the usda's approach.
it's a little bit of a different approach. and we did give thought to that. we actually believe that this -- and one of the reasons we pursued this is because we thought it might be more manageable to smaller lenders. as for what it would fund, this $30 million would fund investment in our i.t. and ensuring that our risk management is as strong as possible. so, you know, we're confident that this will help us be a stronger organization at fha, that it would directly relate to the ability to work with lenders effectively and help them understand how they stand in comparison to their peers. and this is i think the third year that we're asking for this. but during this time, we very much have reached out to the industry and worked with them in terms of taking suggestions. that's why you see the change,
that it's prospective, that it's limited to three years, that it has a sliding scale of what it could be in terms of the basis points. all of that is in response to feedback that we've gotten. >> thank you, mr. secretary. >> let me ask you about -- first of all, welcome, mr. secretary, good seeing you again. let me ask you about colonias, those are the third world condition places that we have along the border. no water, no sewage. housing is something that's needed. sometimes they don't even have electricity. it's in the united states. we added some language through the help of the chairman and the ranking member, to make sure that the colonias were eligible for the self-help home ownership
opportunity program. could you tell us what your plan is for the colonias, number one? then after that, if you could talk about your upward mobility project also. i think that's the cdbg money administered by hud and hss, and see what your work is, what your vision is on that also. so it's the upward mobility and then colonias. >> okay. thank you, representative. good to see a fellow texan. >> yes, sir. >> we have in this budget, we're making a request that we made last year. we really do believe that this would help serve our colonias better. as you know, there are a couple of thousand of them over four states, new mexico, texas, arizona, and california. current there's a 10% cgdb set-aside in those four states. what we're asking for in the fiscal year 2017 budget is that we take it up to 15% but that it still be at the discretion of
those states. this year it's only given the authorization, let's say the states of new mexico, arizona, california, if they so desire, they can go up to that. >> that's right. right now, three of the states, only california. the rest is not. the rest of them are already maxed out at 10%. this would give them authority to go up to 15%. as you mentioned, these are the neediest communities by far in these states, with conditions that require a tremendous amount of attention in terms of infrastructure, in terms of housing, and so forth.
and we believe that this is a modest but important measure that would help improve the quality of life there. as to your other question, this is the second year we're proposing an upward mobility initiative. so the idea behind this is to give our cgdb grantees and home grantees as much upward flexibility as possible. it would allow up to ten communities, states or localities, to combine four sources of funding. cdbg and home from hud, as well as social service block grants and community service block grants from hhs, as a pilot project going forward, allow them to combine those funds for the allowable uses, and basically be able to get a bigger bang for the buck. on top of that, we're requesting $300 million in mandatory appropriation for investments in
communities that would allow that flexibility. so further proactive investments along those lines. and i believe that this is one way that we're trying to fill this gap that was spoken of in terms of the cbdg, that it would be an excellent way to see what some of these communities can do, when we further give them flexibility and have a good impact. >> all right. thank you very much. >> thank you. mr. young, you're recognized, sir. >> thank you, mr. chairman. welcome, secretary. i want to talk about a "des moines register" op ed that was in the paper last summer. there were a few issues you've probably heard about regarding waste and fraud and abuse. it published a story about a $5 million government loan in return for $40,000 in kickbacks. he was never disciplined about
allowed to retire. another hud employee was kept on the payroll for 19 months after charges of threatening to kill and accessing hud computers to obtain information on his victims. we share the same goal of ensuring that funding for hud is spent on the most vulnerable in our communities, who are in really difficult situations, and as the editorial states, and we'll get you a copy of this, quote, every tax dollar lost to waste, fraud, abuse, and incompetence, is a dollar not spent providing shelter for the poor and those who need it. can you comment on what steps hud is taking to address these types of serious personnel problems, prevent them in the future, and increase accountability for taxpayers? in other words, how does this happen and how do we get to keeping our eye on this and making sure this doesn't happen
again? >> i appreciate the opportunity to address that. i had not seen that editorial but look forward to taking a look at it. number one, we're second a culture of accountability at hud. one of the first things that i did within i believe it was the first month that i was there, it may have been the first a couple of weeks, was to send out a joint letter with the inspector general that went out to all employees, encouraging them to collaborate with the inspector general on any types of reviews or investigations that are happening, and make sure that we have a positive working relationship so that we can root out more issues like this. secondly, we have increased our training for employees, including ethics training, so that employees understand the standard that we expect them to hold themselves to and that we will hold them to. third, as i mentioned earlier in my testimony, we are in step with our inspector general on the overwhelming majority of
recommendations that he has made and we're taking implementation of those recommendations seriously. fourth, we're trying to improve our hiring process so that we get the best and brightest from the beginning. i would say these instances you point out are an aberration. the vast majority of hud employees are honest, hard working people. but we also believe that we want to always improve as an organization. one of the things we're trying to do is improve hiring. we recently partnered, for instance, with toyota who came in and worked with our hiring folks to improve the hiring plan process. and we continue to work through the hiring process in general so that we can get the best folks available out there. and we're working with our employees to gauge them and provide an organization that listens to them i think more effectively, so that they feel
more engaged, and the good ones are likely to stay on longer because of that. our employee viewpoint survey scores went up significantly this year. hud was the most improved mid-size agency. we're doing all of those things and others to try and create a hud that is stronger, that is more responsive, and is more likely to avoid some of the individual instances that you pointed out. >> i certainly appreciate that. and i don't mean to infer that -- we only hear the bad things that happen out there on the news. so many positive things are happening as well with your employees. thank you for instituting the ethics training and the personnel programs. finally, i want to comment on v.a.s.h., the veterans affairs supportive housing. you mentioned that early on in your testimony, about a 36% decline in veterans homelessness. that's great. can you talk about how you come up with that data and track that issue?
and then i notice in your budget request, you're really asking only for $7 million for vash, and that's really for tribal justification only. my concern with that is, is that an inference that we don't have a veterans homelessness problem? >> let me answer that part first. that's an important question, of course. it is not. number one, other resources that we're dedicating serve veterans as well. so for instance, when we request, as we are in this budget, additional resources for housing choice vouchers for permanent supportive housing, for rapid rehousing, all of those impact veterans. the lack of a request this year for vash is a recognition that we believe with regard to vash vouchers, that we have the resources we need to address the challenge of veteran homelessness there, as vash vouchers can. we are proud to begin tribal hud
vash. in fact we awarded the first series of allocations in december of 2015. we see a continuing need there. and let me just again thank the the committee on both sides of the aisle because i tell folks in public all the time that this really is an instance where i think things worked out the way that they should on behalf of veterans. the resources have been appropriated. hud and the v.a. have been working with local communities to get these vouchers on the street. and i have to say the teams that work on this are probably the most active and passionate teams on either -- in either agency for obvious reasons. >> on that note i'm going to have to -- >> okay. they've improved the process. and we look forward to continuing to drive down that number. >> we'll have further conversations. thank you. >> thank you, mr. young. mr. secretary, the five fold
issue is a major problem and we talked about this before it makes it impossible for you to deliver audible -- auditable financials, and even worse it is causing hud to violate federal law. so can i have have a firm commitment from you that this accounting problem will be corrected in time for your 2016 audit? >> well, i can tell you that we are working with the gao on this issue right now as well as with the i.g. that, you're right, it is an accounting issue. we don't believe that we're violating the ada on it. but i can pledge to you that we will work diligently with the gao and i.g. on this to resolve it. >> again, mr. secretary, i want to work with you. this is a hugely important issue, so let's just make sure that we focus on that. and i'm obviously willing to work with you to be helpful. >> will do. >> to be helpful.
you are requesting -- let me go to the administrative -- excuse me. you're requesting $2.1 billion for administrative fees, a $427 million increase which is a 26% increase above last year. now, we all understand the importance of supporting public housing authority so that they can efficiently run their programs. but does it really make sense to ask for such a -- i mean, it's a huge increase, to the administrative account. >> yeah, this is an issue that i believe goes to how we can ensure that we have a housing choice voucher program that is more efficient, that is stronger, serves all of those voucher holders better. the fact is that over the last several years we have only
dedicated about let say between 70% and 80% of the admin fee that ought to have been dedicated -- appropriated to housing authorities. what's changed is that we undertook an admin fee study to understand what was the appropriate level that we ought to be investing for the administration of these vouchers. and based on that we had made this request to increase the admin fee. this is important for housing authorities because over the years they've been asked to do more and more with less and less. and we believe this is the right level of funding to ensure that this is a well-run program. and it's a very big program. and it's an important one. and we want to make sure they have the resources to get it right so we avoid bigger problems in the future. >> sure. but hud has -- frankly, that's a good thing a fair amount of success leasing up units and
phas have been able to lease up nearly all of the available units in the voucher program in the past two years. so, again, i don't want to punish you for your success. but if, you know, the question -- begs the question if you are meeting your leasing milestones then why the need for more administrative overhead. >> well, i would say the resources out there for administration are stretched very thin with these housing authorities. and so, you know, they've done a commendable job in many instances of trying to stretch those resources as far as possible. i also understand of course in the budget environment that we're in this kind of expanse is probably not the first thing that folks think about. but it is tremendously important that we adequately resource these housing authorities so that they can continue to do a good job and get even better in the administration at the program. >> my uning is that you're
developing but not yet implemented your new administrative fee structure. so wouldn't it make sense to hold the line on spending for this account until you've actually finalized the new administrative fee formula? >> we believe that we do know the best approach based on the administrative fee study, so that gives us confidence that we understand the level of the appropriation where that ought to be. and that's reflected in the request. >> and finally, what are some efficiencies of the phas -- i don't know why that's hard for me to say, could implement so that they can keep their overhead expenses down? >> you know, there are a number of them actually across the board. in fact, some of them are addressed in chairman luke myers housing opportunity through modernization 3700 legislation basically center around different things. for instance, getting flexibility with regard to
inspections and income verification especially for smaller housing authorities so they're not as administratively burdened. they can do things other than have to routinely check on the same information year after year that oftentimes for many of the residents who stay in the same. if you have for instance a senior resident who is on fixed income and that's demonstrated on record to the housing authority, there's really not a reason that they ought to be verified every single year. that can go to once every two or three years. those are the types of things that we're working -- we want to work with housing authorities on in order to reduce their administrative burden. >> thank you very much, mr. secretary, ranking member. mr. price, you're recognized sir. >> thank you. mr. secretary, before returning to questions i want to briefly return to the initial question about choice neighborhoods because it was a rather
complicated question and certain aspects of it didn't get answered. you might want to respond for the record on some of this, but i'm eager to get on the record one way or the other the answer to the question i ask about the level of demand here, the kind of ratio of meritorious proposals that -- implementation grants we're talking about, to what you're able to fund given your appropriation in recent years. >> yeah, so most recently there were 33 implementation applicants for five implementation grants that were awarded. >> what time period does that cover? >> well, the grants that were last awarded a few months ago, so this would cover the last fiscal year's grants which was, i believe, fiscal year
2014-2015, just a couple months ago where these were awarded. >> all right. so five grants. and how many applicants? >> 33. >> 33. that's fairly typical. >> also you asked about planning grants. we awarded seven planning grants. we had 51 applicants for those grants. >> all right. so that's fairly typical of recent cycles, i assume, that ratio. >> it is. these are the choice neighborhoods is very popular out there. there's a lot more need than we're able to dedicate resources to, and that's one of the reasons that we're requesting a significant increase this year from the $125 million that was appropriated last year to $200 million. >> let me just quickly register a question about this new category of grants that you're proposing, the so-called planning and action grants.
that aims at smaller projects. i wonder what kind of projects you're looking out there. i think i'll ask you to do this for the record. in asking the question i'm somewhat concerned about proliferating too many small and modestly sized grants in a way that begins to eat away at the limited funding we have for implementation grants. after all the implementation grants, the larger grants, the more comprehensive programs is what choice neighborhoods is all about. so i'm going to ask you to elaborate for the record how these smaller grants, especially this new category, might -- what kind of volume you're anticipating there and what the budget impact would be. >> we'd be glad to. as you know this is the first time -- this is a new category and we are excited about it but would be glad to elaborate on the record of why that is and how many we anticipate making and so forth. >> yes, and of course the impact on the main item, which is the implementation grants.
now, housing for the disabled and elderly. i raised this in my opening statement. you know, mr. secretary, many states are struggling to comply with the homestead decision in terms of housing for the disabled. need to do a lot more to integrate people with disabilities into their communities. and this mismatch is widespread between the housing available, the housing required to meet this goal. there's also a dearth of housing for the elderly, the need the 202 program has historically addressed. 10 people often waiting for this unit yet this seeks no funding for additional people of housing for disabilities or the elderly, 202, 811. in the years past has included new resources. i wonder why the request is not more ambitious. and then i just on disabled